If you have ever purchased a product online then it is safe to say that Product returns and Returns Management are something you are familiar with.
It’s a simple enough concept.
You buy a dress online and if the size doesn’t fit, or you have any other issues like the colour, texture or the material isn’t to your liking, you decide to return the dress.
The whole process of returning a product online can be a bit of a hassle and consume your time and efforts. But have you ever thought about the story behind the scenes?
Yes, we are talking about the process how the whole ‘Returns Management’ process takes place once you send an item back to the store.
Well, it all starts with the basic logistics architecture.
While you think that it is difficult for you to return an item you purchased online, you have no idea about the grass on the other side. Any company selling products has a returns management process that comes to action once a customer returns a product they once ordered. While you send the product back and either wait for a replacement or cash, there is a whole other story going on in the company when your product is returned. Let us read on to know more.
What is Returns Management?
The supply chain process of managing any kind of task or activity related to returns, gatekeeping, or reverse logistics is called Returns Management. This process of collecting, organising, or restocking inventory that has been returned for some reason goes after final delivery. Although The returns management process is not used for every order that was placed by the customer, it is very important to carefully and efficiently manage the returns to build a good relationship with your customers.
Returns Management is often referred to as reverse logistics. When a customer returns a product for any reason (manufacturing defect, incorrect size, refund), this part of the supply chain comes to action.
Once a product has been returned, the seller decides to recycle, resell, or destroy the product, depending upon its quality and the situation. They also decide whether to refund the amount for the customer or exchange the product.
A good and systematic returns management process will always be beneficial for any company. If the management of returns is efficient and timely, then it directly leads to increased customer satisfaction resulting in more profit for the company. Any company that sells any kind of goods or products (especially online) has to manage its returns very carefully.
When the process of returns management is implemented efficiently, it allows the company to recognise the reasons for returns or exchange and take proper measures to reduce unwanted returns
What is Reverse Logistics Gatekeeping?
When the products are returned for any reason, they are evaluated based on quality and condition, the quality from before sending the product is compared to that of the returned one, and it is examined if the returned products meet the demands for a product exchange. This process of evaluating and accepting return requests are called gatekeeping.
Gatekeeping is one of the key elements in reverse logistics. Every company takes returns management very crucially and it has a direct effect on the company’s reputation.
The job of a gatekeeper is to prevent any unjustified and invalid returns and ensure that genuinely defective products are replaced or exchanged. For example, the first question in a gatekeeper’s mind should be, “Who is requesting a return and why?”
When the gatekeeper gives a green signal to a product that has been returned, it can further go for a replacement or refund, as requested by the customer.
Why is Returns Management important for eCommerce and supply chain?
In 2020, approximately 8.1 percent of all products that were purchased were returned across the globe. A recent survey suggests that 90% of the customers consider the return option as an important decision-making factor while purchasing a product. Hence, it is obvious returns management has a direct impact on the overall management of your warehousing and storage, inventory, depreciating goods, and soiled items. This means that a good returns management process can either be profitable for a company or cause them losses.
Online shopping and eCommerce are growing with each passing second and so are the returns. Returns management is one of the best ways of building brand loyalty, improving customer retention, and increasing customer satisfaction.
Returns can drive high sales in eCommerce, especially compared to traditional store sales. The latest study suggests that online return rates generally vary from 25-45%. If handled well, it can be very profitable for the company.
An efficient returns management will always result in a positive impact on a company’s financial performance and at the same time, builds its strong relationship with the customers or clients.
How you manage returns will always influence the overall management and working of your warehouse, inventory, and storage. Managing returns is not an easy task as it involves a quality control process. If not handled correctly, it can impact your business and customer relations directly.
How to improve returns processing for effective Returns Management?
Companies and retailers need to have effective returns management or reverse logistics solutions to systematically manage the returns from start to end. Below are a few effective ways to improve returns management:
- A detailed and clear return policy: The return policy of your company should be properly documented, detailed, and easy-to-understand. It should be displayed on your website or app so that it is easily accessed by customers. This will avoid any miscommunication between you and the customers and they will have a clear understanding of refunds, exchanges, return deadlines, etc.
- Using a fulfillment center: When you have a big business, even if you are using the best product returns management software, you may not have the time to manage product returns. To solve this problem, you can use a fulfillment center. You can store and ship your products through this fulfillment center that will also manage your returns.
- Analyze Data from eCommerce: During the returns process, any data collected from the customers can be very useful to understand both products and those who are purchasing them. When this data is analyzed by the sellers, it can be used to improve product offerings and prevent future product returns.
- Understanding controllable and uncontrollable returns: Product returns mean more cost, more inconvenience, and more manpower. To implement better strategic policies to prevent returns of orders, you need to understand both controllable and uncontrollable returns. For example, in the case of controllable returns, you can improve product descriptions and add a variety of photos and videos of the product. You can write detailed product qualities and add a free item, or send them in attractive packaging. In the case of uncontrollable returns, you can give more time window to the customer so he/she can form an attachment with the product and they will be less likely to return it.
AAJ Supply Chain Management
